Strategic Marketing In The Semiconductor Industry

by Joyce Jensch

Strategic marketing in the semiconductor industry is almost an oxymoron. Everybody thinks about it, talks about it and recognizes the need for it. But few equipment or materials suppliers in this industry really dedicate the level of energy and commitment to fully developing it. So what is "it"?

Strategy, the term is derived from the ancient Greek, in which it meant "the art of the general". Until recently, its use was confined to military circles, where it became popular about 200 years ago. One useful military definition is this: "the art of projecting and directing campaigns - a prelude to the battlefield." Strategy is the cornerstone of military command, involving the crucially vital decisions of a war or a campaign. The general, at the apex of the command structure is responsible for devising the key idea or means by which his forces are expected to succeed in reaching the objective. In regard to a business enterprise, strategies and being strategic may be defined as the schemes whereby a firm's resources and advantages are managed (or deployed) in order to surprise and surpass competitors, or to exploit opportunities.

Strategic marketing involves the long-term vision of what the company needs to achieve in order to meet its objectives. Marketing's responsibility is to develop a clear plan defining the roadmap in which the customer's needs are identified and achieved. The marketing executive is the "commander" of the strategy. He or she must clearly outline the resources required in order to be successful in the marketplace. Everything is captured and communicated in the Strategic Marketing Plan (SMP).

As with a successful battle plan, a company's strategic marketing plan cannot operate alone. Executive management (or the Generals) is responsible for setting the direction by communicating corporate technology and business strategy. Finance (the War Chest) sets the scope of the programs through budgets and participates in pricing policies through cost analysis. Engineering (Military Intelligence) determines the technical competence of the organization. While Sales (The Infantry) is the key group that is responsible for implementation of successful programs. Marketing communications - MARCOM (the Messengers) must develop the methods of delivery. All participants must have input and buy-in to the strategic marketing plan.

What's included in the Strategic Marketing Plan?

The company's mission needs to be defined and is one of the key objectives to achieve in the SMP. It is surprising how few companies have a clearly defined mission statement. The larger the organization the greater the probability that effort has been put into producing a mission statement. If one does not exist you may want to interpret the objectives of your company and "write" a mission statement to present to management for verification.

Some of the key points in a mission statement may be growth in market share, revenue, profitability, or diversification or a combination. Make sure you understand them and that the goals do not contradict one another. It is important that you clearly understand the goals and objectives before you begin strategic market planning, or you are doomed to failure.

Marketing Strategy

With the corporate mission in mind, the marketing strategy can be developed. As in the battle plan, the marketing strategy defines the allocation, coordination and resources that are needed to be successful in your "product" campaign. The next step is to identify the "opponent" or in the case of business your target market. Who or what makes up the market you will be spending your valuable resources on to attract?

Other key components of the marketing strategy are a clear definition of the product, price, promotion and distribution. One of the cornerstones of the SMP is the Market Requirement Statement (MRS); a document defining the customer needs for future product development and product enhancements.

Market Potential

Another critical component of the SMP involves the identification of the market potential. This can be from a minimum of five years up to ten years. It should include the current and future market size, the projected market growth, your company's market share and total dollar sales. Within this analysis should be a brief summary of the competitive environment, key strategic concerns and relevant factors impacting market growth.

Key Strategic Marketing Plan Elements

Highlighted in this area would be any issues that would significantly impact market growth. For example, a significant change in technology such as dry ashing may completely eliminate the need for wet process materials that your company provides. These elements should be spelled out in detail for all to consider. There should be several strategic elements identified that will impact the success of your marketing plan. A highly successful industry marketer has called the "Key Strategic Marketing Plan Elements" the strategy heart of the document.

Product Strategy

Another section of the SMP should include the product strategy. Potential customers, their applications, your company's product of choice and a five-year product road map would be the key focus points. A careful analysis of the competitive environment should also be included in this section. A list of the competition, key product benefits and their positioning strategy will provide general insight into what your company's product will encounter in the market.

The competitive analysis logically supports another portion of the product strategy - the resource requirements. It is critical for management to recognize and allocate the resources that will enable your product strategy to be successful. This should be mentioned in an executive summary portion of the SMP, but will be needed here in complete detail for final budgeting. An example of this may be that an additional applications engineer will be required to support the introduction of a new product. The final section of the product strategy should outline any dependencies your marketing group may have on other departments or business partners. For example, the successful evaluation of your new product may depend on the relationship your field seller has with your #1 targeted potential customer.

Tactical Plan

Finally there needs to be a section called the Tactical Plan. This is a listing of the "Events", "The Owner" and "The Timeline" for each activity that must occur for the Strategic Marketing Plan to be successful. The Tactical Plan could list as many as twenty plus tactics needing to be achieved in order for the plan to be implemented. There should be a tracking of events including the date when each event needs to begin, when it is to be completed, and any revisions that may be made to the timeline. The Tactical Plan provides ownership and credibility to the final product  the Strategic Marketing Plan.

There can and should be other data in the SMP. For example, the current status of your product or service in its Product Life Cycle. Your approach for a product in the Introduction Stage will be vastly different than one in the Maturity Stage. More resources including technical product support and marketing communications will be required as you introduce the product to the market. The SMP should address each current and future stage to define the most strategic approach at that time. More information on the development of the SMP and each marketing factor according to its position on the Product Life Cycle will be provided in a future article.

My sincere thanks to Mr. Rick LaFrance for recognizing the need for Strategic Marketing in the Semiconductor Industry. He developed and facilitates a section on this topic for the SEMI sponsored Fundamentals of Product Marketing course.